The Atlanta Fed’s monthly poll of home builder and residential broker business contacts indicated that fewer contacts noted home sales growth on a year-over-year basis than in recent months. The majority of brokers reported that sales in October were flat to slightly up compared with a year earlier, and the majority of builders said that sales were up slightly (see the chart).
More builders and brokers noted a decline in buyer traffic on a year-over-year basis. Many contacts attributed the decline in buyer traffic to seasonal factors, though many noted that the partial federal government shutdown contributed to the fall-off in buyer traffic (see chart).
When contacts were asked if the partial federal government shutdown had an impact on their business, the majority of them (more than two-thirds of builders and three-fourths of brokers) indicated that it did indeed have an impact. They noted the following effects:
- Confusion about the availability of the U.S. Department of Agriculture’s (USDA) Rural Development Single-Family Housing Guaranteed Loan Program, the U.S. Department of Veteran Affairs’ Home Loan Guaranty Program, and the Federal Housing Administration’s (FHA) mortgage insurance
- Slow to no processing of USDA loans
- Delays in the processing of FHA-insured loans
- Lenders’ inability to pull tax returns from the Internal Revenue Service
- Increased uncertainty and confusion, blows to buyer confidence, and evaporation of buyer traffic
- Confusion about the Biggert-Waters Flood Insurance Act, particularly whether or not rate hikes scheduled for October 1 would kick in
Most brokers continued to report home inventory levels were below the year-earlier level, and reports from builders were mixed (see the chart).
Both builders and brokers continued to indicate home price appreciation in October, though fewer brokers indicated price gains than in previous months (see the chart).
The outlook among builders for new home sales growth over the next several months remained positive, although a bit weaker than expectations a year earlier. Their outlook for new home construction has strengthened from recent reports but is still less upbeat than year-earlier responses (see the charts).
The outlook among southeastern brokers for home sales growth continued to weaken from this spring and summer, and they are less optimistic than year-ago expectations (see the chart).
The majority of brokers and builders indicated that the amount of available mortgage credit now meets demand, a marked shift from year-earlier conditions, when contacts overwhelmingly indicated that the amount of available mortgage credit fell short of demand (see the charts).
Builders continue to indicate that amount of available credit for construction/development falls short of demand, though more contacts did report that credit availability now meets demand (see the chart).
Note: October poll results are based on responses from 52 residential brokers and 26 homebuilders and were collected November 4–13, 2013. The housing poll's diffusion indexes are calculated as the percentage of total respondents reporting increases minus the percentage reporting declines. Positive values in the index indicate increased activity, and negative values indicate decreased activity.
If you are a real estate broker or homebuilder and would like to participate in this poll, please let us know by sending a note to RealEstateCenter@atl.frb.org.
By Jessica Dill, senior economic research analyst in the Atlanta Fed's research department